Commentary on Australian and world events from a socialist and democratic viewpoint

What do you do with a problem like Adani ?

Having jumped a number of legal hurdles, Adani is now seeking approvals from the Queensland state government, necessary for the Carmichael coalmine/rail/port project to proceed. This presents the government with a nasty dilemma.

On the one hand, refusing approval would be a PR disaster. Adani, and the government’s opponents, would blame obstructive regulation for the failure of the massive bonanza that has been promised. Adani continues to claim that project will give Queensland $22 billion in royalties and taxes, and up to 10 000 jobs, even though its own expert refuted these claims in court.

On the other hand, everyone (even the International Energy Agency, notably until recently for its stubborn faith in the coal of the future) knows that this project is uneconomic, and unlikely to proceed before 2020, if ever. And while the government has said it won’t subsidise the mine, it appears that it may be forced to spend some money on the Abbot Point upgrade.

So, |irony alert on| I have a simple suggestion to resolve the government’s problem. Just ask for a downpayment of, say, 5 per cent of the promised benefits ($1.1 billion). In the unlikely event that Adani pays up, this will be money for jam. If, as is virtually certain, the money isn’t forthcoming, the government can rightly claim to have protected the interests of the Queensland public.|irony alert off|

Taking the question more seriously, the government should seek evidence from Adani that the project has sufficient finance to proceed before issuing any approval. That will be enough to ensure an indefinite delay.

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22 thoughts on “What do you do with a problem like Adani ?”

I think the best and straightest way a Government should deal with Adani and its claims of Jam Tomorrow is to hold them to their word
1) Adani to GUARANTEE the Government will receive $22 Billion in Royalties and show evidence they have obtained funding guarantees or insurance that back the claim up.
2) Adani to GUARANTEE the Government it will return sufficient income to Government within an agreed timeframe to make the changes to Abbott Point Justified.
3) Adani to GUARANTEE that the Abbot Point upgrades will not endanger the reef and show evidence of funding guarantees or insurances for COMPLETE remediation of any issues to back them up.
4) Adani to agree to fund any legal recourse the Government has to take to ensure compliance
5) These measures should be absolutely no problem to Adani as they know everything they’ve promised is 100% true and so none of these emergency funds will ever be needed. Further as they have a great record on issues of funding, pollution and remediation in other parts of the world, their reputation will ensure their insurance premiums will be minimal.

With those caveats in place and with full insurance on the expected return to the people of QLD, the mine should be allowed to proceed 🙂

The idea that developers whether in mining, residential development, whatever, should be required to post some sort of environmental bond prior to the commencement of operations, has been around for a while. I am not aware of this idea being successfully implemented anywhere. Adani may give all the guarantees it wishes, or which are sought of it, but the other side of the coin here is the willingness or otherwise of governments to actually enforce compliance. Every self-respecting developer sees regulation not as a barrier but as a challenge, to be leapt over, sidestepped or undermined. That is what developers do. Many developers have accepted so-called strict environmental conditions attached to an approval decision only to walk away from or challenge those conditions at a later time and stage. And governments at that point so often acquiesce, turn a blind eye or turn the other cheek.

faustusnotes :
is there any private project in the history of the Australian economy that has produced 10,000 jobs, let alone in rural Queensland?

According to the government site on the Snowy Mountain Scheme, “up to” 7300 at any given time and a total of 100,000 (1949-1974)… Of course the “weasel words” with the Adani numbers are “directly and INDIRECTLY” employed.

Peter Chapman :
The idea that developers whether in mining, residential development, whatever, should be required to post some sort of environmental bond prior to the commencement of operations, has been around for a while.

And you would be correct in thinking that this has not been successful. Numbers that I have seen suggest between Queenland and New South Wales in the order of 20 to 50 billion dollars less than what the actual rehabilitation cost will be.
Not to mention that some of the less financially solid miners just disappeared into the sunset when the money ran out… no reason to be suspicious about a venture that looks shaky from the start :-^
Of course down here in Victoria we’re just going for the “creature from the black lagoon” solution 😉

Personally I’d be happy to see some brave politician suggest that the royalty money be set aside and used first – and only – for rehabilitation. Cherry on top is to use exclusively local employees for rehabilitation. Then (and only then) the remainder of the royalty money is allowed to flow into general revenue.
I am extremely keen to see Victorian coal mining go away but I have family in the Latrobe Valley… I have no wish to see communities destroyed just because we have to kill coal.

Perhaps if the Abbot Point upgrade was made conditional on significant further investment/development of the Carmichael project, it would block both.

I suspect Adani wants approval not with any intention of development, but so that the project can remain on the Company books as a theoretically ‘viable’ asset rather than a unrecoverable loss from a blocked investment. Especially given the involute character of the business finances.

In December 2011, Adani Power said that it was putting 6,500 MW of capacity expansion projects on hold due to coal supply uncertainties. The plants on hold include Pench Thermal Power Project in Madhya Pradesh, Bhadreshwar Thermal Power Project (Adani) in Gujarat, and Dahej Thermal Power Project in Gujarat.[

None of these three projects have started construction. Adani has even added to its portfolio of shovel-ready projects, buying two for 4 GW from Welspun. So wait-and-see is Adani’s strategy, not an accident.

Deutsche Bank says India has 280GW of power capacity, and peak demand of just 145GW.

So Gautam Adani may be betting that overall demand will rise, taking with it returns for coal-generated electricity. It’s a very risky bet, as the breakneck expansion of utility solar and wind will lower peak wholesale prices for electricity and coal capacity factors – the German coal disease that has shredded the share prices of RWE and E.on. If distributed solar takes off, it’s even worse. Every other human in the world is on the other side of the bet, praying it fails.

Those guarantees are worth exactly the cash value they have right now, though. Bankruptcy laws ensure that if the government can’t see those guarantees right now and pocket the cash, they’re never going to get the money. It would actually be an interesting experiment in economics to do that, but I suspect that Prof Q’s suggestion of a $1.1B cash payment would be more lucrative.

@Moz of Yarramulla
That’s why I mentioned insurance. There are many precedents such as film completion insurance. This means if they accidentaly or deliberately go “bust” or try company musical chairs, the insurance kicks in.
Good, honest companies would be rewarded with considerably lower premiums

I don’t understand what the ‘dilemma’ is. Government gives approval, Adani postpones using it until conditions are better. How is that a problem for the government?

Is the issue that the government has promised some matching public infrastructure upgrade? If so, the government just has to say that it won’t do its side until Adani’s side is far enough advanced to be irreversible.

Having just opened presents that cost more than I value them at but accepting that our joint welfare is up, I have to look at the moral dimension of the Adani investment. The dilemma can only be solved by Qld Gov ( from royalties) and Adani investing in research to reduce emissions in India and to encourage adaptation. I can live with that!

Yes there has: the Australian made car, aka the Holden. There was some assistance from Chifley’s Labor Government if I recall by way of a sizable low (or zero ?) interest loan, part of the conditions of which was that GMH would establish some kind of auto manufacturing in every state of Australia – the jobs created in the post WWII recovery period being the major reason for pushing for Australian manufacture.

I think you will find that many more than 10,000 jobs were created throughout Australia.

@faustusnotes
(Facetiously) The coffee machine and mobile phone. The Barista positions and selling of mobile phone cover seem to have created more jobs than this.

But this begs the quality of the jobs. I can see Adani a throwback to the 19th C providing sustainable 21st Century jobs.

Perhaps if the logic of the project is so bad dreaded free market economics will actually do us some good like it did in the nuclear industry or CCS and kill it stone dead in the absence of buckets of taxpayer subsidies.

GrueBleen, the ABC tells me Holden peaked at employing 24000 people which in the 1960s woudl, I guess, be about the same as 30,000 now (various age adjustments being accounted for). That was on non-automated manufacturing at 7 plants around Australia …

I think that the Adani claim of 10,000 includes both direct and indirect employment. If you add all the indirect employees (sales, service, components and spare parts manufacture etc) to the GMH 24,000 it would be at least doubled, I expect.

I also remember GMH as the only company I am aware of that had a railway station on a major metropolitan rail line named after it – the General Motors station on Melbourne’s Dandenong line which fed the GMH Dandenong plant. Of course the GM station is defunct now.

It seems to me J.Q. is saying that the Adani proposal presents a political dilemma for the party forming the current Qld state government. Further, it is a political dilemma only as it has no ramifications other than perception problems (public relations) and potential re-election problems for this state government. As such, it is a non-problem. Labor and the LNP in Australian politics are both incorrigible neocon groupings when it comes to economic policy. We can expect zero adaptive initiatives (with respect to real economy and real environment problems) from either grouping. Past behaviour is the best predictor of future behaviour in this regard.

From a tactical political point of view, I think Annastacia Palaszczuk’s correct course of action is patently clear. That is to act as little as possible. The minimal action possible would come from applying the current applicable law to the letter and from applying nil or as little as possible in the way of Ministerial discretion. Along with this apply nil subsidies in money or kind unless already contractually obligated by (obviously stupid) previous commitments if said commitments cannot be weaseled out of at a lesser compensatory cost. I think the recent refusals to overtly subsidise Clive Palmer and Adani are playing well to the state electorate as a whole. These refusals may or may not present local seat problems but at the big-picture state level they are playing well. People are sick of billionares and rich corporations getting special deals. People have enough experience now, especially post GFC, to see that nothing is trickling down to the 99%.

When a wounded farm animal is doomed it is humane to shoot it. When arrogant and rich billionaires and corporations are wounded and hemorrhaging cash there are all of schadenfreude, political mileage and salutary lessons in allowing them and/or their projects to financially die as publicly, slowly, painfully and humiliatingly as possible.

Ikonoclast :
We can expect zero adaptive initiatives (with respect to real economy and real environment problems) from either grouping. Past behaviour is the best predictor of future behaviour in this regard.
From a tactical political point of view, I think Annastacia Palaszczuk’s correct course of action is patently clear. That is to act as little as possible.

So sad, and yet so true.

Coal is just one of the issues where for “deliverables” there’s not a cigarette paper between the LNP and Labor. As with many environmental issues, Labor “talks the talk” much better than the LNP – but it is just play acting for the left-ish intelligentsia.

I realise that this sounds bitter and cynical, and maybe it is 🙂
It is, however, born of thirty years of following these issues reasonably closely – too many cases where failure to grasp the nettle has obvious (to me, at least) repercussions a couple of decades down the track.

On the one hand, refusing approval would be a PR disaster. Adani, and the government’s opponents, would blame obstructive regulation for the failure of the massive bonanza that has been promised.

And by “acting as little as possible” in the name of not giving the opposition a stick to beat them with, it’s just going to rattle around the courts and the banks for a few more years… provoking more “Lawfare” from the feds.

Maybe the Palaszczuk government can take the “hundreds of millions” the Newman government pledged for the project and actually do something useful with it… but I expect with the usual “short term thinking” of politics that the availability of that money was foolishly dependant on the mining royalties continuing ever upwards.

There are court challenges to mining in the Galillee Basin. One group won the last court challenge but then the Minister for the Environment changed the statutory law that was used in the case.

I spoke to EDO in QLD and another environmental lawyer in Queensand, and the court challenges in process are based on statutory law. The problem with using statutory law to take the government to court is that the government can just change the statutory law. This is why incorporating non-statutory law like the public trust doctrine with existing statutory law and codes and international agreements is the better option since the non-statutory law can’t be changed but only interpreted in the courts.

When His Hon. Robert French Chief Justice spoke at uni earlier this year on the interaction of trusts and statutes he drew attention to the principle of coherence in the law. The broiler farm barrister argued that it was not a matter of coherence but of conflict between laws and said one text book says that in the case of conflict the more specific law (like eg the broiler code) should prevail. But the Chief Justice also pointed to a 2015 law article on the principle of coherence, and this article said a recent decision means that coherence is more important.

I am not a citizen of QLD so I can’t go to the court challenges about the mines.

But any individual in QLD could do what I did with the broiler farm case, both as an individual resident of QLD who us affected by climate change, and as a concerned citizen wanting to be heard in the public interest.

This is to either join with a party or go to the court case and request to be heard (I wrote a 6000 word statement of my grounds for standing for this) and then if the court agrees to hear them, they can make an argument of merits – this is where you would point out the impacts of climate change on QLD (like the floods Etc) and the concern of residents and council etc, then make a legal argument starting with the most specific laws applicable and finishing with the non-statutory laws to draw everything together.

I found it quite stressful writing my statements and going to VCAT but I still did it, and someone from QLD could do the same thing in the Galilee Basin mining court cases.

The reason I recommend this is because when the CEO of the Dutch NGO who sued the Durch government to act on climate change spoke in Australia , the environmental lawyer on the panel said that to lead up to a high court case the public trust doctrine should be revived in Australia, as it is neither well known or used that much. So bringing it to public attention and also testing it in the courts is important before a high court case, to make the high court case more likely to succeed.

Any high court case should be a class action I think, which is what Julian Burnside recommended when I asked him. But individuals can test the public trust doctrine – in relation to other laws – in the lower courts to build up precedents and public awareness.

If any commenter from QLD is interested in doing this I can give you my statement of grounds and statement of merits so you can see what sort of thing to write.

Also since you are in QLD if you were given leave to call experts, you could ask John Quiggin to speak on the economic matters. I addressed economic matters a bit in my argument, but it could be addressed more – I basically argued the tribunal shouldn’t approve the broiler farm not only in the public interest but when the government acts on climate change it could confiscate the broiler farm which would be an economic loss for the developer. The same thing could be argued about the mine. The public trust doctrine precedent I used was the USA Kelo decision.

The VCAT case hasn’t been decided yet so I still don’t know what will happen in that case. The broiler farm barrister said in his reply to me that if the tribunal found in favour of the argument I made logically it would not just apply to broiler farms, but to agriculture generally, residential development etc. I was just a small part of the case though, with the main arguments and experts about things other than climate change.

Actually since the QLD Land Court hearing about Adani has been decided, the next hearing is in the Federal Court. This means I could request to be heard myself probably, since I am a citizen in the Commonwealth. But I am sure it would go better if there was a citizen from QLD as well as me. I’ll find out what the process is to request to be heard in a Federal Court case.

I found out you make an interlocutor’s application to be joined as a party or heard at the Federal Court. The court case date does not seem to have been decided yet, but it looks like the date will be decided early next year and the case held in Queensland.

The current parties are The Australian Conservation Foundation (represented by the Queensland Environment Defender’s Office) and the Minister for the Environment (represented by the Government Solicitor) and Adani (Represented by the Amhurst law firm).

I will ask the EDO what their current plans are, in case they changed their minds from when I last spoke to them and they will argue the public trust doctrine themselves, so I wouldn’t need to ask to be a party. I already wrote to Greg Hunt and the Governor General about this last year, so in my application to be joined as a party I can put a copy of that and the responses I got, so as to demonstrate my prior concern about the development of the mine.

Greg Hunt wrote a statement of his grounds for giving permission to the development of the mine, which is online.

This considers climate change in terms of the impact on the Great Barrier Reef, increasing ocean temperatures, and increasing ocean acidification.

It considers the direct and indirect ghg emissions and overseas emissions – these are said to equal 4,729,988,241 tCO2-eq – but says the overseas emissions from burning the coal (which form the vast majority of the total emissions being 4,643,730,979 tCO2-eq) “are not a direct response to the proposed action” with the Minister concluding that he “found that direct and consequential greenhouse gas emissions associated with the project will be managed and mitigated through national and international emissions control frameworks operating in Australia and within countries that are the import market for coal from the project.”

The next section considers the economic benefits of the project, with the Minister concluding “that even on the most conservative of the economic models, the proposed action will have appreciable benefits for the Mackay Region economy and the Queensland economy.”

It is quite an annoying document, as it can’t be searched since it is pdf image not text. But it is quite obvious that the Minister should not say that the vast majority of GHG emissions should not be counted in his decision, due to international and national agreements meaning they won’t cause undue climate change

If any of the QLD commenters are interested in this, if you could write a comment I would appreciate it, and I will find out if the EDO is already going to use the public trust doctrine (which they weren’t last time I talked to them a few months back) or if it needs to be addressed separately in a submission for the Court to weigh it up in its decisions, but I think they are still on Christmas holidays now. And I’ll see if I can get pro-bono legal advice too, since VCAT is the least formal court, and it was still very difficult not being a lawyer and not knowing what the protocol was etc.

I talked to a lawyer about costs, and you get this addressed at the start of the hearing, asking that since you are raising a public interest matter the court doesn’t award costs against you.